If the product cost is unknown, Better Reports cannot compute COGS. In such cases, the built-in formula assumes that COGS is equal to Net Sales, resulting in a 0% margin.
As a consequence, your COGS is overstated and your gross margin is understated. This is an arbitrary choice, used as a conservative measure. You could easily create your own COGS and Gross Margin measures to achieve a different outcome. For example, your formula might assume that, if the product cost is unknown, the gross margin should be set to 10% arbitrarily.